Oklahoma Cuts Tax Expenditures

A bill that suspends more than two dozen tax credits for two years to help plug a $1.2 billion hole in the state budget has been signed into law by Oklahoma Gov. Brad Henry.

The deferred tax credits include those for the restoring of historical buildings, certain job creation and the generation of wind power.

As states in bad fiscal shape look to balance their budgets, broadening tax bases could be preferable to tax rate increases. There is some benefit in cutting distortionary tax expenditures. And broadening bases now can enable rate cuts in the future. One good thing to come out of the state fiscal mess is that some states have stopped to examine what they are getting for expensive tax expenditures.

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